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7. Real median income, which Burns assumes will grow 1.4 percent in 2015 and 2.2 percent in 2016. 8. Renter mobility rate, which Burns assumes will grow 0.1 percent in 2015 and 0.2 percent in 2016, to 25.1 percent and 25.3 percent, respectively. 9. Rental capitalization rates. Te best indicator for rising valuation, and thereby increased rental remodel investment, is falling cap rates. 10. Demographics, driving slow, consistent changes in the number of remodels and spending per remodel. 11. Increases in the supply of homes 12. Aging housing stock 13. Infationary price increase, which Burns assumes to be 1.4 percent in 2015 and 1.7 percent in 2016. 14. Limited labor availability for pro remodeling Time will tell if the calculations behind each of these drivers yields an accurate forecast. But in the short term it has given greater credence to a more robust outlook for remodeling in the near term. Te Burns forecast of 7.8 percent exceeds the numbers projected by Harvard's LIR A, which comes in at 2.8 percent. | John Burns Real Estate Consulting LLC is widely respected for its forecasts in residential new construction as well as its coverage of major companies serving residential construction. Firms interesting in learning more about the new forecast can email Burns' SVP Lisa Marquis Jackson at lmjackson@realestateconsulting.com. those were statistically much more important driving factors than mobility. So once we peeled back the efect of higher home prices, rising incomes, HELOC activity and those types of things, it turns out that mobility was a much less important driver than it would look if we just tabulated the raw data. We really had to look deep." Te Burns model calculations are proprietary as are the calculations for many remodeling drivers and negative inputs. What can be shared is a list of what the Burns team sees as key drivers — 14 in all. Tey are: 1. GDP growth, which Burns assumes will be 2.4 per- cent in 2015 and 2.7 percent in 2016. 2. Equity and HELOC lending. Burns expects to- tal revolving HELOC loans outstanding to decline 3.2 percent in 2015, maintaining the current YTD trend, followed by a 1 percent increase in outstanding HELOC loans in 2016. 3. Home price appreciation, which Burns assumes will appreciate 4.6 percent in 2015 and 4.2 percent in 2016. 4. Interest rate increases to the efective federal funds rate by six basis points in 2015 to 0.15 percent and then 33 basis points in 2016 to 0.48 percent, which is what is suggested by the bond market. 5. Resale home sales and turnover of the owner housing stock. Burns expects resale sales to be 5.3 million existing-home sales in 2015 and 5.4 million existing-home sales in 2016. 6. Natural disasters, which Burns assumes will be at the 30-year-median level. 2007 2005 2004 2003 2002 2001 2000 2008 2006 2009 2010 2011 2012 2013 2014 2015P 2016P 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 Households: Headwind for Owner Remodeling Owner household growth assumption: +489K in 2015, +677K in 2016 Renter household growth assumption: +587K in 2015, +647K in 2016 ■ Total Rental Household Growth ■ Total Owner Household Growth Source: Census Bureau; John Burns Real Estate Consulting LLC (Data: 1Q15, Pub: Sep-15) The seven-year decline in owner-occupied households has been a headwind for owner remodeling, says JBRC. The eroding base of owner- occupied households means fewer potential big-project owner remodels, regardless of other economic activity. Millions Seven years of declining owner households SPECIAL REPORT: Industry Research 26 October 2015 QR QualifiedRemodeler.com